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Edison execs could get bonuses if rate changes are OK'd

Southern California Edison officials would get ratepayer-funded bonuses if the state approves major electricity rate changes next week, according to a prominent ratepayer advocacy group. The California Public Utilities Commission said Wednesday it would consider the controversial electricity rate changes at a special meeting on Friday, July 3 — the start of a holiday weekend. The proposal, backed by Edison and other utility companies, would raise prices for people who use the least energy, while lowering prices substantially for those who use the most. Eventually, all customers would pay a fixed monthly fee of $10, or $5 for some low-income customers.

Southern California Edison officials would get ratepayer-funded bonuses if the state approves major electricity rate changes next week, according to a prominent ratepayer advocacy group.

The California Public Utilities Commission said Wednesday it would consider the controversial rate changes at a special meeting on Friday, July 3 — the start of a holiday weekend. The rate proposal, backed by Edison and other utility companies, would raise prices for people who use the least energy, while lowering prices substantially for those who use the most. Eventually, customers would pay a fixed monthly fee of $10, or $5 for some low-income customers.

Consumer advocates have blasted the proposal, describing it as a massive giveaway to the wealthy and saying it will reduce the incentive to save energy and install solar panels. Public utilities commissioner Mike Florio has written a competing proposal, which doesn't include the monthly fee and would change rates less dramatically.

Utility companies have argued that their proposed changes are about fairness, and that monthly fees are necessary to keep the electric grid running. Clearly, the changes are important to them: Southern California Edison and San Diego Gas & Electric have promised some executives higher bonuses if the new rate structure gets approved, according to The Utility Reform Network.

The San Francisco-based ratepayer advocacy group estimates that officials in Edison's external relations and government affairs departments could earn about $844,000 in extra pay if they convince state officials to approve the changes.

"They want ratepayers to pay for their lobbying activities that will harm ratepayers," said Marcel Hawiger, a staff attorney at The Utility Reform Network.

Mike Marelli, a regulatory affairs official at Edison, said in a statement that the utility "doesn't include lobbying costs in customer rate requests. As a result, any such incentives for employees aren't included in the calculations of the incentive request."

But it's not clear whether that statement addresses the types of bonuses described by The Utility Reform Network.

The ratepayer advocacy group has also criticized San Diego Gas & Electric. The utility confirmed that 16 executives — including CEO Jeff Martin — could receive a total of $65,696 in bonuses if the changes are approved.

"If Mr. Martin is going to make his case in a public letter, he should include all the relevant facts — including the additional compensation Martin stands to collect under a bonus plan that will reward executives if they win the fixed charges SDG&E wants," Matthew Freedman, a staff attorney for the ratepayer advocacy group, said in a statement.

Asked to respond to the group's criticisms, SDG&E spokesperson Stephanie Donovan said executive compensation accounts for less than 1 percent of the money the utility wants to collect from ratepayers over the next few years. And the electricity rate-related bonuses, she noted, would account for a small fraction of executive compensation.

Ultimately, the bonus issue probably won't play a major role in determining which electricity rate proposal state officials will choose.

Under the utility-backed plan, which is supported by public utilities commission President Michael Picker, the number of electricity rate tiers would be reduced from four to two. People who use the least electricity would end up paying more, and those who use the most electricity would end up paying a lot less.

Under an alternate proposal written by commissioner Mike Florio, the number of tiers would be reduced from four to three. It's something of a middle ground between where rates are now and where the utilities want them to go.

Florio's proposal would also reject the fixed charges that utility companies want, opting instead for $10 minimum bills ($5 for some low-income customers).

Locally, the Palm Springs City Council got involved in the rate debate this week, sending a letter to state officials urging them to reject the utility-backed proposal. Councilman Paul Lewin brought the issue to the council's attention after reading about it in The Desert Sun.

"This is poor public policy that undermines efforts to encourage people to conserve energy," the council wrote in its letter, referring to the utility company proposal. "By raising rates for our low and fixed-income citizens, this proposal poses a threat to the health and welfare of our most vulnerable citizens."

The council also criticized so-called "time-of-use" electricity rates, which involves changing the price of energy depending on the time of day and time of year. Time-varying rates are supposed to encourage conservation when demand is highest, but the council argued they could "pose a significant hardship on our city."

"Residents of Palm Springs and the Coachella Valley cannot adjust their daytime use of electricity in any meaningful way, because average daily temperatures exceed 100 degrees for roughly 4 months of the year," the council wrote.

Both electricity rate proposals, though, would switch all Edison customers to time-of-use rates within the next few years, essentially making that outcome a foregone conclusion. Customers, however, would have the ability to opt out.

The California Public Utilities Commission will take comments on the dueling rate proposals at its meeting this Thursday, June 25. For those not able to make it to San Francisco for the 9:30 a.m. meeting, public comments can be sent to public.advisor@cpuc.ca.gov.

Sammy Roth writes about energy and water for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.